France: Settlement agreement: signature after a mutual consent termination agreement (“rupture conventionnelle”)

21 November 2014

In a decision dated 26 March 2014, the French Supreme Court, for the first time, ruled that a settlement agreement can be signed in case of a mutual consent agreement under certain conditions.

In a decision without precedents the French Supreme Court ruled that after a mutual consent agreement it would be possible to sign a settlement agreement if the two following conditions are met:

  • The settlement agreement must be signed after the ratification (“homologation”) or authorization (“authorisation” in case of protected employees) of the mutual consent termination by the labour authorities
  • The settlement agreement must only cover the performance of the employment contract (not its termination).

If those two conditions are not met, the settlement agreement is null and void.

This article is part of the Southern Europe Employment Law Update for December 2014